Pensions Act 1995

must be increased annually by at least the appropriate percentage.

• (3) Subsection (2) does not apply to the annual rate of a pension under an occupational pension scheme, or to a part of that rate, if under the rules of the scheme the rate or part is for the time being being increased at intervals of not more than twelve months by at least the relevant percentage.

• (4) For the purposes of subsection (3) the relevant percentage is—

• (a) the percentage increase in the consumer prices index for the reference period, being a period determined, in relation to each periodic increase, under the rules, or

• (b) if lower, the default percentage for that period.

• (4ZA) Subsection (2) does not apply to the annual rate of a pension under an occupational pension scheme, or to a part of that rate, if subsection (4ZB) applies to the rate or part.

• (4ZB) Subject to subsection (4ZD), this subsection applies to the rate or part if, under the rules of the scheme, the rate or part is for the time being being increased, and since the relevant time has always been increased, at intervals of not more than twelve months by at least—

• (a) the percentage increase in the retail prices index for the reference period, being a period determined, in relation to each periodic increase, under the rules, or

• (b) if lower, the default percentage for that period.

• (4ZC) In subsection (4ZB) “the relevant time” means—

• (a) the beginning of 2011 or, if later, the time when the pension became a pension in payment, or

• (b) if the pension was transferred to the scheme from another occupational pension scheme as a pension in payment after the beginning of 2011, the time of the transfer.

• (4ZD) If the pension was transferred to the scheme as mentioned in subsection (4ZC)(b), subsection (4ZB) does not apply to the rate or part unless, immediately before the transfer, subsection (4ZB) (read with this subsection if relevant) applied to the rate or part by reference to the scheme from which the pension was transferred (or would have applied had subsection (4ZB) been in force immediately before the transfer).

• (4ZE) If only part of the pension is attributable to pensionable service or, as the case may be, to payments in respect of employment carried on on or after 6 April 1997, in subsections (3) to (4ZD) references to the annual rate of the pension are references to so much of that rate as is attributable to that part.

• (4ZF) For the purposes of subsections (4) and (4ZB) the default percentage for a period is the percentage for that period which corresponds to—

• (a) in the case of a category X pension, 5% per annum, and

• (b) in the case of a category Y pension, 2.5% per annum.

• (4ZG) In subsections (4) and (4ZB)—

• “consumer prices index” means—the general index of consumer prices (for all items) published by the Statistics Board, orwhere that index is not published for a month, any substituted index or figures published by the Board;

• “retail prices index” means—the general index of retail prices (for all items) published by the Statistics Board, orwhere that index is not published for a month, any substituted index or figures published by the Board.

• (4A) For the purposes of this section, a pension is a category X pension if it is—

• (a) a pension which became a pension in payment before the commencement day, or

• (b) a pension—

• (i) which becomes a pension in payment on or after the commencement day, and

• (ii) the whole of which is attributable to pensionable service before that day.

• (4B) For the purposes of this section, a pension is a category Y pension if it is a pension—

• (a) which becomes a pension in payment on or after the commencement day, and

• (b) the whole of which is attributable to pensionable service on or after the commencement day.

• (4C) For the purposes of applying this section in the case of a pension—

• (a) which becomes a pension in payment on or after the commencement day,

• (b) part of which is attributable to pensionable service before the commencement day, and

• (c) part of which is attributable to pensionable service on or after that day,

each of those parts of the pension is to be treated as if it were a separate pension.

• (5) Regulations may provide that any of the provisions of this section apply in relation to a pension as if so much of it as would not otherwise be attributable to pensionable service or to payments in respect of employment were attributable to pensionable service or, as the case may be, payments in respect of employment—

• (a) before 6 April 1997 or the commencement day,

• (b) on or after that day, or

• (c) partly before and partly on or after that day.

• (6) This section does not apply to any pension or part of a pension which is attributable (directly or indirectly) to a pension credit or which, in the opinion of the trustees or managers, is derived from the payment by any member of the scheme of voluntary contributions.

• (7) This section does not apply to any pension (or part of a pension) under a relevant occupational pension scheme which—

• (a) is a cash balance benefit (see section 51ZB), and

• (b) first comes into payment on or after the day on which section 21 of the Pensions Act 2011 comes into force.

• (8) An occupational pension scheme is a “relevant occupational pension scheme” if—

• (a) it has not, at any time on or after 6 April 1997, been a salary related contracted-out scheme (see section 7B of the Pension Schemes Act 1993), or

• (b) it has, at any time on or after 6 April 1997, been a salary related contracted-out scheme but no person is entitled to receive, or has accrued rights to, benefits under the scheme attributable to a period on or after that day when it was such a scheme.

Meaning of “the appropriate percentage”

51ZA

• (1) For the purposes of section 51(1)(c) and (2), “the appropriate percentage” in relation to an increase in the whole or part of the annual rate of a pension—

• (a) in the case of a category X pension, means the higher revaluation percentage for the latest revaluation period specified in the order under paragraph 2 of Schedule 3 to the Pension Schemes Act 1993 (revaluation of accrued pension benefits) which is in force at the time of the increase, and

• (b) in the case of a category Y pension, means the lower revaluation percentage for that period.

• (2) In this section “the higher revaluation percentage”, “the lower revaluation percentage” and “the revaluation period” have the same meaning as in paragraph 2 of Schedule 3 to the Pension Schemes Act 1993.

Meaning of “cash balance benefit”

51ZB

• (1) For the purposes of section 51(7)(a), a pension provided to or in respect of a member of an occupational pension scheme is a “cash balance benefit” if conditions 1 and 2 are met.

• (2) Condition 1 is that the rate of the pension is calculated by reference to a sum of money (“the available sum”) which is available under the scheme for the provision of benefits to or in respect of the member.

• (3) Condition 2 is that under the scheme—

• (a) there is a promise about the amount of the available sum, but

• (b) there is no promise about the rate or amount of the benefits to be provided.

• (4) The promise mentioned in subsection (3)(a) includes in particular a promise about the change in the value of, or the return from, payments made under the scheme by the member or by any other person in respect of the member.

• (5) The promise mentioned in subsection (3)(b) includes a promise that—

• (a) the amount of the available sum will be sufficient to provide benefits of a particular rate or amount;

• (b) the rate or amount of a benefit will represent a particular proportion of the available sum.

• (6) But a pension is not prevented from being a cash balance benefit merely because under the scheme there is a promise that—

• (a) the rate or amount of a benefit payable in respect of a deceased member will be a particular proportion of the rate or amount of a benefit which was (or would have been) payable to the member;

• (b) the amount of a lump sum payable to a member, or in respect of a deceased member, will represent a particular proportion of the available sum.

Restriction on increase where annuity tied to investments.

51A

• (1) No increase under section 51 is required to be made, at any time on or after the relevant date, of so much of any pension under a money purchase scheme as—

• (a) is payable by way of an annuity the amount of which for any year after the first year of payment is determined (whether under the terms of the scheme or under the terms of the annuity contract in pursuance of which it is payable) by reference to fluctuations in the value of, or the return from, particular investments; and

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) satisfies such other conditions (if any) as may be prescribed.

• (2) For the purposes of this section it shall be immaterial whether the annuity in question is payable out of the funds of the scheme in question or under an annuity contract entered into for the purposes of the scheme.

• (3) In this section “the relevant date” means the date appointed for the coming into force of section 51 of the Child Support, Pensions and Social Security Act 2000.

Restriction on increase where member is under 55.

52

• (1) Subject to subsection (2), no increase under section 51 is required to be paid to or for a member of a scheme whose pension is in payment but who has not attained the age of 55 at the time when the increase takes effect.

• (2) Subsection (1) does not apply if the member—

• (a) is permanently incapacitated by mental or physical infirmity from engaging in regular full-time employment, or

• (b) has retired on account of mental or physical infirmity from the employment in respect of which, or on retirement from which, the pension is payable.

• (3) The rules of a scheme may provide that if, in a case where a pension has been paid to or for a member under the age of 55 at an increased rate in consequence of subsection (2), the member—

• (a) ceases to suffer from the infirmity in question before he attains the age of 55, but

• (b) continues to be entitled to the pension,

any increases subsequently taking effect under section 51 in the annual rate of the pension shall not be paid or shall not be paid in full.

• (4) In any case where—

• (a) by virtue only of subsection (1) or (3), increases are not paid to or for a member or are not paid in full, but

• (b) the member attains the age of 55 or, in a case falling within subsection (3), again satisfies the condition set out in subsection (2)(a) or (b),

his pension shall then become payable at the annual rate at which it would have been payable apart from subsection (1) or (3).

Effect of increases above the statutory requirement.

53

• (1) Where in any tax year the trustees or managers of an occupational pension scheme make an increase in a person’s pension, not being an increase required by section 109 of the Pension Schemes Act 1993 or section 51 of this Act, they may deduct the amount of the increase from any increase which, but for this subsection, they would be required to make under either of those sections in the next tax year.

• (2) Where in any tax year the trustees or managers of such a scheme make an increase in a person’s pension and part of the increase is not required by section 109 of the Pension Schemes Act 1993 or section 51 of this Act, they may deduct that part of the increase from any increase which, but for this subsection, they would be required to make under either of those sections in the next tax year.

• (3) Where by virtue of subsection (1) or (2) any pensions are not required to be increased in pursuance of section 109 of the Pension Schemes Act 1993 or section 51 of this Act, or not by the full amount that they otherwise would be, their amount shall be calculated for any purpose as if they had been increased in pursuance of the section in question or, as the case may be, by that full amount.

• (3A) In subsections (1) and (2), the references to a person’s pension do not include any pension which is attributable (directly or indirectly) to a pension credit.

• (4) In section 110 of the Pension Schemes Act 1993 (resources for annual increase of guaranteed minimum pension)—

• (a) subsections (2) to (4) are omitted, and

• (b) in subsection (1), for “subsection (2) or (3)” there is substituted “ section 53 of the Pensions Act 1995 ”.

Sections 51 to 53: supplementary.

54

• (1) The first increase required by section 51 in the rate of a pension must take effect not later than the first anniversary of the date on which the pension is first paid; and subsequent increases must take effect at intervals of not more than twelve months.

• (2) Where the first such increase is to take effect on a date when the pension has been in payment for a period of less than twelve months, the increase must be of an amount at least equal to one twelfth of the amount of the increase so required (apart from this subsection) for each complete month in that period.

• (3) In sections 51 to 53 and this section—

• “annual rate”, in relation to a pension, means the annual rate of the pension, as previously increased under the rules of the scheme or under section 51,

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “the commencement day” means the day appointed for the coming into force of section 278 of the Pensions Act 2004 (amendments to section 51),

• “pension”, in relation to a scheme, means any pension in payment under the scheme and includes an annuity.

Section 51: end of annual increase in GMP.

55

In section 109 of the Pension Schemes Act 1993 (annual increase of guaranteed minimum pensions)—

• (a) in subsection (2) (increase in rate of that part of guaranteed minimum pension attributable to earnings factors for tax year 1988-89 and subsequent tax years) for “the tax year 1988-89 and subsequent tax years” there is substituted “ the tax years in the relevant period ”, and

• (b) after subsection (3) there is inserted—

(3A) The relevant period is the period— (a) beginning with the tax year 1988-89, and (b) ending with the last tax year that begins before the principal appointed day for the purposes of Part III of the Pensions Act 1995

.

Minimum funding requirement

Minimum funding requirement.

56

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Valuation and certification of assets and liabilities.

57

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Schedules of contributions.

58

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Determination of contributions: supplementary.

59

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Serious underprovision.

60

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sections 56 to 60: supplementary.

61

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Equal treatment

The equal treatment rule.

62

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Equal treatment rule: supplementary.

63

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Equal treatment rule: exceptions.

64

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Equal treatment rule: consequential alteration of schemes.

65

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Equal treatment rule: effect on terms of employment, etc.

66

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of overseas residents etc.

Prohibition on different rules for overseas residents etc.

66A

• (1) This section applies where an occupational pension scheme contains provisions contravening subsection (2) or (3).

• (2) Except so far as regulations otherwise provide, provisions of an occupational pension scheme contravene this subsection to the extent that they would (apart from this section) have an effect with respect to—

• (a) the entitlement of any person to benefits under the scheme, or

• (b) the payment to any person of benefits under the scheme,

which would be different according to whether or not a place outside the United Kingdom is specified by that person as the place to which he requires payments of benefits under the scheme to be made to him.

• (3) Except so far as regulations otherwise provide, provisions of an occupational pension scheme contravene this subsection to the extent that they would (apart from this section) have an effect with respect to—

• (a) the entitlement of any person to remain a member of the scheme,

• (b) the eligibility of any person to remain a person by or in respect of whom contributions are made towards or under the scheme, or

• (c) the making by or in respect of any person who is a member of the scheme of any contributions towards or under the scheme,

which would be different according to whether that person works wholly in the United Kingdom or wholly or partly outside the United Kingdom.

• (4) Provisions contravening subsection (2) shall have effect, in relation to all times after the coming into force of section 55 of the Child Support, Pensions and Social Security Act 2000, as if they made the same provision in relation to a person who requires payments of benefits to be made to a place outside the United Kingdom as they make in relation to a person in whose case all payments of benefits fall to be made to a place in the United Kingdom.

• (5) Provisions contravening subsection (3) shall have effect, in relation to all times after the coming into force of section 55 of the Child Support, Pensions and Social Security Act 2000, as if they made the same provision in relation to persons working wholly or partly outside the United Kingdom as they make in relation to persons working wholly in the United Kingdom.

• (6) This section—

• (a) shall be without prejudice to any enactment under which any amount is to be or may be deducted, or treated as deducted, from amounts payable by way of benefits under the scheme or treated as so payable; and

• (b) shall not apply in relation to so much of any provision of a scheme as is required for securing compliance with the conditions of any registration, exemption or relief given or available under the Tax Acts.

Modification of schemes

The subsisting rights provisions

67

• (1) The subsisting rights provisions apply to any power conferred on any person by an occupational pension scheme to modify the scheme, other than a power conferred by—

• (a) a public service pension scheme, or

• (b) a prescribed scheme or a scheme of a prescribed description.

• (1A) Any exercise of such a power to make a prohibited modification is void.

• (2) Any exercise of such a power to make a regulated modification is voidable in accordance with section 67G unless the following are satisfied in respect of the modification—

• (a) in the case of each affected member—

• (i) if the modification is a protected modification, or the scheme is a collective money purchase scheme within the meaning of Part 1 of the Pension Schemes Act 2021, the consent requirements (see section 67B),

• (ii) if sub-paragraph (i) does not apply, either the consent requirements or the actuarial equivalence requirements (see section 67C),

• (b) the trustee approval requirement (see section 67E), and

• (c) the reporting requirement (see section 67F).

• (3) The subsisting rights provisions do not apply in relation to the exercise of a power—

• (a) for a purpose connected with debits under section 29(1) of the Welfare Reform and Pensions Act 1999, ...

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3A) Regulations may provide for cases in which the subsisting rights provisions do not apply.

• (4) References in this section and sections 67A to 67I to “the subsisting rights provisions” are to this section and those sections.

• (5) Subsection (6) applies in relation to the exercise of a power to which the subsisting rights provisions apply to make a regulated modification where a member of the scheme dies before the requirements mentioned in subsection (2), so far as they apply in his case, have been complied with in respect of the modification if—

• (a) before he died he had given his consent to the modification in accordance with section 67B(4)(b), or

• (b) before he died, or before the trustees of the scheme had become aware that he had died, the trustees had complied with section 67C(4)(a), (b) and (d) in respect of the modification in his case.

• (6) Any of the requirements mentioned in subsection (2), as it applies in respect of the modification—

• (a) which is satisfied in the case of the member, or

• (b) which would have been satisfied in his case had he not died before it was satisfied,

is to be taken to be satisfied in the case of any survivor of the member in respect of the modification.

The subsisting rights provisions: interpretation

67A

• (1) In the subsisting rights provisions, each of the following expressions has the meaning given to it by the following provisions of this section—

• “prohibited modification”

• “regulated modification”

• “protected modification”

• “detrimental modification”

• “affected member”

• “subsisting right”

• “scheme rules”.

• (1A) “Prohibited modification” means a modification of an occupational pension scheme which on taking effect would or might result in any subsisting right of—

• (a) a member of the scheme, or

• (b) a survivor of a member of the scheme,

which is not a right or entitlement to money purchase benefits becoming, or being replaced with, a right or entitlement to collective money purchase benefits under the scheme rules.

• (2) “Regulated modification” means a modification which is—

• (a) a protected modification, or

• (b) a detrimental modification,

or is both.

• (3) “Protected modification” means a modification , other than a prohibited modification, of an occupational pension scheme which—

• (a) on taking effect would or might result in a relevant transformation of any subsisting right of a member of the scheme or a survivor of a member of the scheme (see subsection (3A)),

• (b) would or might result in a reduction in the prevailing rate of any pension in payment under the scheme rules , other than a pension that is a collective money purchase benefit, or

• (c) is of a prescribed description.

...

• (3A) For the purposes of subsection (3)(a), there is a relevant transformation of a subsisting right where—

• (a) a subsisting right that is not a right or entitlement to money purchase benefits becomes, or is replaced with, a right or entitlement to money purchase benefits under the scheme rules,

• (b) a subsisting right that is a right or entitlement to money purchase benefits other than collective money purchase benefits becomes, or is replaced with, a right or entitlement to collective money purchase benefits under the scheme rules, or

• (c) a subsisting right that is a right or entitlement to collective money purchase benefits becomes, or is replaced with, a right or entitlement to money purchase benefits other than collective money purchase benefits under the scheme rules.

• (3B) For the purposes of subsection (3A), the reference in the definition of “money purchase benefits” in section 181(1) of the Pension Schemes Act 1993 to the widow, widower or surviving civil partner of a member of an occupational pension scheme is to be read as including any other survivor of the member.

• (4) “Detrimental modification” means a modification , other than a prohibited modification, of an occupational pension scheme which on taking effect would or might adversely affect any subsisting right of—

• (a) any member of the scheme, or

• (b) any survivor of a member of the scheme.

• (5) A person is an “affected member”—

• (a) in relation to a protected modification within paragraph (a) or (b) of subsection (3), if, at the time the modification takes effect, he is—

• (i) a member of the scheme, or

• (ii) a survivor of a member of the scheme,

and, on taking effect, the modification would or might affect any of his subsisting rights as mentioned in that paragraph,

• (b) in relation to a protected modification within paragraph (c) of that subsection, if he is of a prescribed description, and

• (c) in relation to a detrimental modification which is not a protected modification if, at the time the modification takes effect, he is—

• (i) a member of the scheme, or

• (ii) a survivor of a member of the scheme,

and, on taking effect, the modification would or might adversely affect any of his subsisting rights.

• (6) “Subsisting right” means—

• (a) in relation to a member of an occupational pension scheme, at any time—

• (i) any right which at that time has accrued to or in respect of him to future benefits under the scheme rules, or

• (ii) any entitlement to the present payment of a pension or other benefit which he has at that time, under the scheme rules, and

• (b) in relation to the survivor of a member of an occupational pension scheme, at any time, any entitlement to benefits, or right to future benefits, which he has at that time under the scheme rules in respect of the member.

For this purpose, “right” includes a pension credit right.

• (7) At any time when the pensionable service of a member of an occupational pension scheme is continuing, his subsisting rights are to be determined as if he had opted, immediately before that time, to terminate that service.

• (8) “Scheme rules”, in relation to a scheme, means—

• (a) the rules of the scheme, except so far as overridden by a relevant legislative provision,

• (b) the relevant legislative provisions, to the extent that they have effect in relation to the scheme and are not reflected in the rules of the scheme, and

• (c) any provision which the rules of the scheme do not contain but which the scheme must contain if it is to conform with the requirements of Chapter 1 of Part 4 of the Pension Schemes Act 1993 (preservation of benefit under occupational pension schemes).

• (9) For the purposes of subsection (8)—

• (a) “relevant legislative provision” means any provision contained in any of the following provisions—

• (i) Schedule 5 to the Social Security Act 1989 (equal treatment for men and women);

• (ii) Chapter 2 or 3 of Part 4 of the Pension Schemes Act 1993 (certain protection for early leavers) or regulations made under either of those Chapters;

• (iia) Chapter 1 or 2 of Part 4ZA of that Act (transfers and contribution refunds) or regulations made under either of those Chapters;

• (iii) Part 4A of that Act (requirements relating to pension credit benefit) or regulations made under that Part;

• (iv) section 110(1) of that Act (requirement as to resources for annual increase of guaranteed minimum pensions);

• (v) this Part of this Act (occupational pensions) or subordinate legislation made or having effect as if made under this Part;

• (vi) section 31 of the Welfare Reform and Pensions Act 1999 (pension debits: reduction of benefit);

• (vii) any provision mentioned in section 306(2) of the Pensions Act 2004;

• (xi) section 55 of the Pension Schemes Act 2015;

• (xii) regulations made under section 56 or 57 of the Pension Schemes Act 2015;

• (xiii) sections 21, 23, 26, 28, 29 and 33 of and Schedule 1 to the Pension Schemes Act 2017;

• (xiv) regulations made under section 18(4) of or paragraph 1(6) of Schedule 2 to the Pension Schemes Act 2021;

• (xv) sections 34, 39, 41, 42 and 45 of the Pension Schemes Act 2021;

• (b) a relevant legislative provision is to be taken to override any of the provisions of the scheme if, and only if, it does so by virtue of any of the following provisions—

• (i) paragraph 3 of Schedule 5 to the Social Security Act 1989;

• (ii) section 129(1) of the Pension Schemes Act 1993;

• (iii) section 117(1) of this Act;

• (iv) section 31(4) of the Welfare Reform and Pensions Act 1999;

• (v) section 306(1) of the Pensions Act 2004;

• (ix) section 55(3) of the Pension Schemes Act 2015;

• (x) regulations made under section 56(4) or 57(4) of the Pension Schemes Act 2015;

• (xi) sections 21(7), 23(7), 26(9), 28(6), 29(2) and 33(5) of and paragraph 1(7) of Schedule 1 to the Pension Schemes Act 2017;

• (xii) sections 18(7)(b), 34(5), 39(6), 41(6), 42(2) and 45(5) of and paragraph 1(7) of Schedule 2 to the Pension Schemes Act 2021.

• (10) For the purposes of this section—

• (a) “survivor”, in relation to a member of an occupational pension scheme, means a person who—

• (i) is the widow or widower of the member, or

• (ii) has survived the member and has any entitlement to benefit, or right to future benefits, under the scheme rules in respect of the member, and

• (b) a modification would or might adversely affect a person’s subsisting right if it would alter the nature or extent of the entitlement or right so that the benefits, or future benefits, to which the entitlement or right relates would or might be less generous.

• (11) In the subsisting rights provisions, in relation to—

• (a) the exercise of a power to modify an occupational pension scheme to which the subsisting rights provisions apply, or

• (b) a modification made, or to be made, in exercise of such a power,

references to “the scheme” are to be read as references to the scheme mentioned in paragraph (a).

The consent requirements

67B

• (1) References in the subsisting rights provisions to the consent requirements, in respect of a regulated modification, are to be read in accordance with this section.

• (2) The consent requirements apply in the case of an affected member—

• (a) if the modification is a protected modification;

• (b) if it is not a protected modification, unless the actuarial equivalence requirements apply in his case.

• (3) The consent requirements consist of—

• (a) the informed consent requirement (see subsection (4)), and

• (b) the timing requirement (see subsection (6)).

• (4) The informed consent requirement is satisfied in the case of an affected member if before the modification is made—

• (a) the trustees have—

• (i) given him information in writing adequate to explain the nature of the modification and its effect on him,

• (ii) notified him in writing that he may make representations to the trustees about the modification,

• (iii) afforded him a reasonable opportunity to make such representations, and

• (iv) notified him in writing that the consent requirements apply in his case in respect of the modification, and

• (b) after the trustees have complied with paragraph (a)(i), (ii) and (iv), the affected member has given his consent in writing to the modification.

• (5) If—

• (a) the modification is not a protected modification, and

• (b) before the modification is made the trustees notify an affected member in writing that—

• (i) if he gives his consent to the modification for the purposes of the consent requirements, those requirements apply in his case in respect of the modification, but

• (ii) otherwise, the actuarial equivalence requirements apply in his case in respect of the modification,

the trustees are to be taken to have complied with subsection (4)(a)(iv) in respect of him.

• (6) The timing requirement is satisfied in the case of an affected member if the modification takes effect within a reasonable period after the member has given his consent to the modification in accordance with subsection (4)(b).

The actuarial equivalence requirements

67C

• (1) References in the subsisting rights provisions to the actuarial equivalence requirements, in respect of a detrimental modification which is not a protected modification, are to be read in accordance with this section and section 67D.

• (2) The actuarial equivalence requirements apply in the case of an affected member only if—

• (a) the modification is not a protected modification, and

• (b) the trustees of the scheme determine that they are to apply in his case.

• (3) The actuarial equivalence requirements consist of—

• (a) the information requirement (see subsection (4)),

• (b) the actuarial value requirement (see subsection (5)), and

• (c) the actuarial equivalence statement requirement (see subsection (6)).

• (4) The information requirement is satisfied in the case of an affected member if before the modification is made the trustees have taken all reasonable steps to—

• (a) give him information in writing adequate to explain the nature of the modification and its effect on him,

• (b) notify him in writing that he may make representations to the trustees about the modification,

• (c) afford him a reasonable opportunity to make such representations, and

• (d) notify him in writing that the actuarial equivalence requirements apply in his case in respect of the modification.

• (5) The actuarial value requirement is satisfied in the case of an affected member if before the modification is made the trustees have made such arrangements, or taken such steps, as are adequate to secure that actuarial value will be maintained.

• (6) The actuarial equivalence statement requirement is satisfied in the case of an affected member if the trustees have, within a reasonable period beginning with the date on which the modification takes effect, obtained an actuarial equivalence statement relating to the affected member in respect of the modification.

• (7) For the purposes of subsection (6) “actuarial equivalence statement” means a statement in writing which—

• (a) is given by—

• (i) the actuary appointed in relation to the scheme under section 47(1)(b), or

• (ii) a person with prescribed qualifications or experience or who is approved by the Secretary of State, and

• (b) certifies that actuarial value has been maintained.

• (8) For the purposes of subsections (5) and (7) as they apply in relation to an affected member, actuarial value is maintained if the actuarial value, immediately after the time at which the modification takes effect, of the affected member’s subsisting rights is equal to or greater than the actuarial value of his subsisting rights immediately before that time.

The actuarial equivalence requirements: further provisions

67D

• (1) This section applies for the purposes of section 67C.

• (2) Where—

• (a) the information requirement has been satisfied in the case of an affected member in respect of a proposed modification (“the original modification”),

• (b) before the trustees have made a determination, or given their consent, for the purposes of section 67E(1) in relation to the original modification, the original modification has been revised, and

• (c) the modification as so revised (“the revised modification”) does not differ from the original modification in any material respect,

the information requirement is to be taken to have been satisfied in relation to the revised modification.

• (3) The trustees are to be regarded as having taken all reasonable steps to notify an affected member as mentioned in section 67C(4)(d) in respect of a modification if they have taken all reasonable steps to notify him in writing that—

• (a) if he gives his consent to the modification for the purposes of the consent requirements, those requirements apply in his case in respect of the modification, but

• (b) otherwise, the actuarial equivalence requirements apply in his case in respect of the modification.

• (4) Any calculation for the purposes of section 67C of the actuarial value of an affected member’s subsisting rights at any time must conform with such requirements as may be prescribed.

• (5) Requirements prescribed by regulations under subsection (4) may include requirements for any such calculation to be made in accordance with guidance that is prepared and from time to time revised by a prescribed body.

• (6) Nothing in subsections (6) and (7) of section 67C precludes actuarial equivalence statements relating to—

• (a) two or more affected members, or

• (b) affected members of any particular description,

in respect of a modification being given in a single document.

The trustee approval requirement

67E

• (1) For the purposes of section 67(2)(b), the trustee approval requirement is satisfied in relation to the exercise of a power to make a regulated modification if—

• (a) the trustees of the scheme have determined to exercise the power to make the modification, or

• (b) if the power is exercised by another person, the trustees have consented to the exercise of the power to make the modification,

and the making of the determination, or giving of consent, complies with subsections (2) and (3).

• (2) The trustees must not make a determination, or give their consent, for the purposes of subsection (1) unless, in the case of each affected member—

• (a) if the modification is a protected modification, the informed consent requirement is satisfied (within the meaning of section 67B), or

• (b) if it is not a protected modification—

• (i) the informed consent requirement is satisfied, or

• (ii) the information and actuarial value requirements are satisfied (within the meaning of section 67C),

in respect of the modification.

• (3) The trustees must not make a determination, or give their consent, for the purposes of subsection (1) more than a reasonable period after the first consent given by an affected member under section 67B(4)(b) in respect of the modification was given.

The reporting requirement

67F

• (1) For the purposes of section 67(2)(c), the reporting requirement is satisfied in relation to the exercise of a power to which the subsisting rights provisions apply to make a regulated modification if the trustees have, in accordance with subsection (2)—

• (a) notified each affected member in whose case the consent requirements apply in respect of the modification, and

• (b) taken all reasonable steps to notify each affected member in whose case the actuarial equivalence requirements apply in respect of the modification,

that they have made a determination, or given their consent, for the purposes of section 67E(1) in relation to the exercise of the power to make the modification.

• (2) The trustees must give (or, where the actuarial equivalence requirements apply, take all reasonable steps to give) the notification—

• (a) within a reasonable period beginning with the date of the determination or giving of consent mentioned in subsection (1), and

• (b) before the date on which the modification takes effect.

Powers of the Authority: voidable modifications

67G

• (1) Subsection (2) applies in relation to a regulated modification made in exercise of a power to which the subsisting rights provisions apply which is voidable by virtue of—

• (a) section 67(2), or

• (b) section 67H(3).

• (2) The Authority may make an order declaring that subsection (6) applies in relation to the regulated modification.

• (3) An order under subsection (2) relating to a regulated modification may also declare that subsection (6) applies in relation to—

• (a) any other modification of the scheme made by the exercise of the power mentioned in subsection (1), or

• (b) the grant of any rights under the scheme (whether by virtue of the attribution of notional periods as pensionable service or otherwise) in connection with the regulated modification.

• (4) An order under subsection (2) relating to a regulated modification must specify the affected member or affected members or description of affected members in respect of whom subsection (6) applies (“the specified persons”).

• (5) An order under subsection (2) relating to a regulated modification may also—

• (a) require the trustees to take, within the time specified in the order, such steps as are so specified for the purpose of giving effect to the order;

• (b) declare that subsection (7) applies in relation to anything done by the trustees after the time at which the modification would, disregarding the order, have taken effect which—

• (i) would not have contravened any provision of the scheme rules if the modification had taken effect at that time, but

• (ii) as a result of the modification being void to any extent by virtue of the order, would (but for that subsection) contravene such a provision.

This is without prejudice to section 174(3).

• (6) Where the Authority make an order declaring that this subsection applies in relation to a modification of a scheme, or the grant of any rights under the scheme, the modification or grant is void to the extent specified in the order, and in respect of the specified persons, as from the time when it would, disregarding the order, have taken effect.

• (7) Where, by virtue of subsection (5)(b), the Authority make an order under subsection (2) declaring that this subsection applies in relation to anything done by the trustees, that thing is to be taken, for such purposes as are specified in the order, not to have contravened any provision of the trust deed or scheme rules.

• (8) An order under subsection (2) relating to a regulated modification, or other modification, of a scheme or the grant of any rights under the scheme may be made before or after the time at which the modification or grant would, disregarding the order, have taken effect.

Powers of the Authority to intervene

67H

• (1) Subsection (2) applies where the Authority have reasonable grounds to believe that a power to which the subsisting rights provisions apply—

• (a) will be exercised, or

• (b) has been exercised,

to make a regulated modification in circumstances where the modification will be voidable by virtue of section 67(2).

• (2) The Authority may by order—

• (a) in a case within subsection (1)(a), direct the person on whom the power is conferred not to exercise the power to make the regulated modification;

• (b) require the trustees to take, within the time specified in the order, such steps as are so specified for the purpose of securing that any of the requirements mentioned in section 67(2) is satisfied.

• (3) A regulated modification made in exercise of a power to which the subsisting rights provisions apply is voidable in accordance with section 67G if—

• (a) the exercise of the power contravened an order under paragraph (a) of subsection (2), or

• (b) the trustees fail to comply with a requirement imposed by an order under paragraph (b) of that subsection relating to any exercise of the power to make the modification.

Subsisting rights provisions: civil penalties

67I

• (1) Subsections (2) and (3) apply where a regulated modification is voidable by virtue of section 67(2).

• (2) Where the modification was made by the exercise of a power—

• (a) by the trustees of the scheme, or

• (b) by any other person in circumstances which do not fall within subsection (3),

section 10 applies to any trustee who has failed to take all reasonable steps to secure that the modification is not so voidable.

• (3) Section 10 applies to any person other than the trustees of the scheme who, without reasonable excuse, exercises a power to make the modification if—

• (a) the trustees have not given their consent, for the purposes of section 67E(1), to the exercise of the power to make the modification, or

• (b) in the case of any affected member, the timing requirement is not satisfied (within the meaning of section 67B) in respect of the modification.

• (4) Where the trustees fail to comply with any requirement imposed, by virtue of subsection (5)(a) of section 67G, by an order under subsection (2) of that section, section 10 applies to any trustee who has failed to take all reasonable steps to secure such compliance.

• (5) Where a regulated modification is made by the exercise of a power in contravention of an order under section 67H(2)(a)—

• (a) if the power is exercised by the trustees, section 10 applies to any trustee who has failed to take all reasonable steps to secure that the order was not contravened;

• (b) section 10 applies to any other person who without reasonable excuse exercises the power in contravention of the order.

• (6) Where the trustees fail to comply with any requirement specified in an order under section 67H(2)(b), section 10 applies to any trustee who has failed to take all reasonable steps to secure such compliance.

Power of trustees to modify schemes by resolution.

68

• (1) The trustees of a trust scheme may by resolution modify the scheme with a view to achieving any of the purposes specified in subsection (2).

• (2) The purposes referred to in subsection (1) are—

• (a) to extend the class of persons who may receive benefits under the scheme in respect of the death of a member of the scheme,

• (b) to enable the scheme to conform with such arrangements as are required by section 241 of the Pensions Act 2004,

• (c) to enable the scheme to comply with such terms and conditions as may be imposed by the Board of the Pension Protection Fund in relation to any payment made by it under section 185 or 186 of the Pensions Act 2004,

• (d) to enable the scheme to conform with section 37(2), 76(2), 91 or 92,

• (da) to enable the scheme to accommodate persons with pension credits or pension credit rights, and

• (e) prescribed purposes.

• (3) No modification may be made by virtue of subsection (2)(a) without the consent of the employer.

• (4) Modifications made by virtue of subsection (2)(b) may include in particular—

• (a) modification of any limit on the number of, or of any category of, trustees, or

• (b) provision for the transfer or vesting of property.

• (5) Nothing done by virtue of subsection (2)(d), or any corresponding provisions in force in Northern Ireland, shall be treated as effecting an alteration to the scheme in question for the purposes of section 591B (cessation of approval) of the Taxes Act 1988.

• (6) Regulations may provide that this section does not apply to trust schemes falling within a prescribed class or description.

Grounds for applying for modifications: winding up registered schemes

69

• (1) The Authority may, on an application made to them by the trustees of a registered pension scheme which is being wound up, make an order—

• (a) modifying the scheme for the purpose of enabling assets remaining after the liabilities of the scheme have been fully discharged to be distributed to the employer, or

• (b) authorising the trustees to modify the scheme for that purpose.

• (2) But the Authority may act under subsection (1) only if prescribed requirements in relation to the distribution are satisfied.

• (3) Regulations may make provision requiring applications under subsection (1) to meet prescribed requirements.

• (4) Regulations may provide that in prescribed circumstances this section does not apply to schemes falling within a prescribed class or description or applies to them with prescribed modifications.

• (5) In this section “registered pension scheme” means an occupational pension scheme registered under section 153 of the Finance Act 2004 (other than a public service pension scheme).

Section 69: supplementary.

70

• (1) The Authority may not make an order under section 69 unless they are satisfied that the purposes for which the application for the order was made—

• (a) cannot be achieved otherwise than by means of such an order, or

• (b) can only be achieved in accordance with a procedure which—

• (i) is liable to be unduly complex or protracted, or

• (ii) involves the obtaining of consents which cannot be obtained, or can only be obtained with undue delay or difficulty.

• (2) The extent of the Authority’s powers to make such an order is not limited, in relation to any purposes for which they are exercisable, to the minimum necessary to achieve those purposes.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Effect of orders under section 69.

71

• (1) An order under paragraph (b) of subsection (1) of section 69 may enable those exercising any power conferred by the order to exercise it retrospectively (whether or not the power could otherwise be so exercised) and an order under paragraph (a) of that subsection may modify a scheme retrospectively.

• (2) Any modification of a scheme made in pursuance of an order of the Authority under section 69 is as effective in law as if it had been made under powers conferred by or under the scheme.

• (3) An order under section 69 may be made and complied with in relation to a scheme—

• (a) in spite of any enactment or rule of law, or any rule of the scheme, which would otherwise operate to prevent the modification being made, or

• (b) without regard to any such enactment, rule of law or rule of the scheme as would otherwise require, or might otherwise be taken to require, the implementation of any procedure or the obtaining of any consent, with a view to the making of the modification.

• (4) In this section, “retrospectively” means with effect from a date before that on which the power is exercised or, as the case may be, the order is made.

Modification by Authority to secure winding-up.

71A

• (1) The Authority may at any time while—

• (a) an occupational pension scheme is being wound up, and

• (b) the employer in relation to the scheme is subject to an insolvency procedure,

make an order modifying that scheme with a view to ensuring that it is properly wound up.

• (2) The Authority shall not make such an order except on an application made to them, at a time such as is mentioned in subsection (1), by the trustees or managers of the scheme.

• (3) Except in so far as regulations otherwise provide, an application for the purposes of this section must be made in writing.

• (4) Regulations may make provision—

• (a) for the form and manner in which an application for the purposes of this section is to be made to the Authority;

• (b) for the matters which are to be contained in such an application;

• (c) for the documents which must be attached to an application for the purposes of this section or which must otherwise be delivered to the Authority with or in connection with any such application;

• (d) for persons to be required, before an application is made for the purposes of this section, to give such notifications of the making of the application as may be prescribed;

• (e) for the matters which are to be contained in a notification of such an application;

• (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) The power of the Authority to make an order under this section—

• (a) shall be limited to what they consider to be the minimum modification necessary to enable the scheme to be properly wound up; and

• (b) shall not include power to make any modification that would have a significant adverse effect on—

• (i) the accrued rights of any member of the scheme; or

• (ii) any person’s entitlement under the scheme to receive any benefit.

• (6) A modification of an occupational pension scheme by an order of the Authority under this section shall be as effective in law as if—

• (a) it had been made under powers conferred by or under the scheme;

• (b) the modification made by the order were capable of being made in exercise of such powers notwithstanding any enactment, rule of law or rule of the scheme that would have prevented their exercise for the making of that modification; and

• (c) the exercise of such powers for the making of that modification would not have been subject to any enactment, rule of law or rule of the scheme requiring the implementation of any procedure or the obtaining of any consent in connection with the making of a modification.

• (7) Regulations may provide that, in prescribed circumstances, this section—

• (a) does not apply in the case of occupational pension schemes of a prescribed class or description; or

• (b) in the case of occupational pension schemes of a prescribed class or description applies with prescribed modifications.

• (8) The times when an employer in relation to an occupational pension scheme shall be taken for the purposes of this section to be subject to an insolvency procedure are—

• (a) in the case of a trust scheme, while section 22 applies in relation to the scheme; and

• (b) in the case of a scheme that is not a trust scheme, while section 22 would apply in relation to the scheme if it were a trust scheme;

and for the purposes of this subsection no account shall be taken of modifications or exclusions contained in any regulations under section 118.

• (9) The Authority shall not be entitled to make an order under this section in relation to a public service pension scheme.

Modification of public service pension schemes.

72

• (1) The appropriate authority may make such provision for the modification of a public service pension scheme as could be made in respect of a scheme other than a public service pension scheme by an order of the Authority under section 69(1)(a).

• (2) In this section “the appropriate authority”, in relation to a scheme, means such Minister of the Crown or government department as may be designated by the Treasury as having responsibility for the particular scheme.

• (3) The powers of the appropriate authority under this section are exercisable by means of an order—

• (a) directly modifying the scheme (without regard, in the case of a scheme contained in or made under powers conferred by an enactment, to the terms of the enactment or any of its restrictions), or

• (b) modifying an enactment under which the scheme was made or by virtue of which it has effect.

• (4) Any such order may adapt, amend or repeal any such enactment as is referred to in paragraph (a) or (b) of subsection (3) as that authority thinks appropriate.

Supervision of winding-up

Reports to Authority about winding-up.

72A

• (1) Where—

• (a) an occupational pension scheme is being wound up, and

• (b) the winding-up is one beginning at a time (whether before or after the passing of this Act) by reference to which regulations provide that it is to be a winding-up to which this section applies,

it shall be the duty of the trustees or managers, in accordance with this section, to make periodic reports in writing to the Authority about the progress of the winding-up.

• (2) In the case of each winding-up, the first report to be made under this section shall be made—

• (a) except in a case to which paragraph (b) applies—

• (i) after the end of the prescribed period beginning with the day on which the winding-up began; and

• (ii) before the end of the prescribed period that begins with the end of the period that applies for the purposes of sub-paragraph (i);

and

• (b) in a case where the winding-up began before the coming into force of the regulations which (for the purposes of subsection (1)(b)) prescribe the time by reference to which the winding-up is one to which this section applies, before such date as may be prescribed by those regulations.

• (3) Subject to subsection (4), each subsequent report made under this section in the case of a winding-up shall be made no more than twelve months after the date which (apart from any postponement under subsection (4)) was the latest date for the making of the previous report required to be made in the case of that winding-up.

• (4) If, in the case of any report required to be made under subsection (3), the Authority consider (whether on an application made for the purpose or otherwise) that it would be appropriate to do so, they may, at any time before the latest time for the making of that report, postpone that latest time by such period as they think fit.

• (5) The latest time for making a report shall not be postponed under subsection (4) by more than twelve months.

• (6) Subject to the application of the limit specified in subsection (5) to the cumulative period of the postponements, more than one postponement may be made under subsection (4) in the case of the same report.

• (7) A report under this section—

• (a) must contain such information and statements as may be prescribed; and

• (b) must be made in accordance with the prescribed requirements.

• (8) Regulations may—

• (a) provide that, in prescribed circumstances, there shall be no obligation to make a report that would otherwise fall to be made under this section;

• (b) make provision for the period within which, and the manner in which, applications may be made for a postponement under subsection (4); and

• (c) modify subsections (3) and (5) by substituting periods of different lengths for the periods for the time being specified in those subsections.

• (9) If there is any failure by the trustees or managers of any scheme to comply with their duty to make a report in accordance with the requirements imposed by or under this section—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) section 10 applies (irrespective of the description of scheme involved) to any trustee or manager who has failed to take all such steps.

Directions by Authority for facilitating winding-up.

72B

• (1) Subject to the following provisions of this section, the Authority shall have power, at any time after the winding-up of an occupational pension scheme has begun, to give directions under this section if they consider that the giving of the direction is appropriate on any of the grounds set out in subsection (2).

• (2) Those grounds are—

• (a) that the trustees or managers of the scheme are not taking all the steps in connection with the winding-up that the Authority consider would be being taken if the trustees or managers were acting reasonably;

• (b) that steps being taken by the trustees or managers for the purposes of the winding-up involve things being done with what the Authority consider to be unreasonable delay;

• (c) that the winding-up is being obstructed or unreasonably delayed by the failure of any person—

• (i) to provide information to the trustees or managers;

• (ii) to provide information to a person involved in the administration of the scheme;

• (iii) to provide information to a person of a prescribed description; or

• (iv) to take any step (other than the provision of information) that he has been asked to take by the trustees or managers;

• (d) that the winding-up would be likely to be facilitated or accelerated by the taking by any person other than the trustees or managers of any other steps;

• (e) that in any prescribed circumstances not falling within paragraphs (a) to (d)—

• (i) the provision by any person of any information to the trustees or managers or to any other person, or

• (ii) the taking of any other step by any person,

would be likely to facilitate or accelerate the progress of the winding-up.

• (3) Except in prescribed circumstances, the power of the Authority to give a direction under this section in the case of a winding-up shall be exercisable only where—

• (a) periodic reports about the progress of the winding-up are required to be made under section 72A; and

• (b) the first report that has to be made for the purposes of that section in the case of that winding-up either has been made or should have been made.

• (4) Regulations may provide that, in prescribed circumstances, the Authority shall not give a direction on the ground set out in subsection (2)(e) except in response to an application made by the trustees or managers of the scheme for the giving of a direction on that ground.

• (5) A direction under this section is a direction in writing given to and imposing requirements on—

• (a) any or all of the trustees or managers of the scheme;

• (b) a person who is involved in its administration; or

• (c) a person of a prescribed description.

• (6) The requirements that may be imposed by a direction under this section are any requirement for the person to whom it is given, within such period specified in the direction as the Authority may consider reasonable—

• (a) to provide the trustees or managers with all such information as may be specified or described in the direction;

• (b) to provide a person involved in the administration of the scheme with all such information as may be so specified or described;

• (c) to provide a person who is of a prescribed description with all such information as may be so specified or described;

• (d) to take such steps (other than the provision of information) as may be so specified or described.

• (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (8) Regulations may—

• (a) impose limitations on the steps that a person may be required to take by a direction under this section;

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (9) In this section references, in relation to a scheme, to a person involved in the administration of the scheme are (subject to subsection (10)) references to any person who is so involved otherwise than as—

• (a) the employer in relation to that scheme;

• (b) a trustee or manager of the scheme;

• (c) the auditor of the scheme or its actuary;

• (d) a legal adviser of the trustees or managers of the scheme;

• (e) a fund manager for the scheme;

• (f) a person acting on behalf of a person who is involved in the administration of the scheme;

• (g) a person providing services to a person so involved;

• (h) a person acting in his capacity as an employee of a person so involved;

• (i) a person who would fall within any of paragraphs (f) to (h) if persons acting in relation to the scheme in any capacity mentioned in the preceding paragraphs were treated as involved in the administration of a scheme.

• (10) In this section references, in relation to a scheme, to a person involved in the administration of the scheme do not include references to persons of a particular description if regulations provide for persons of that description to be excluded from those references.

Duty to comply with directions under s. 72B.

72C

• (1) It shall be the duty of any person to whom a direction is given under section 72B to comply with it.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) Section 10 applies to any trustee or manager of a scheme who fails, without reasonable excuse, to take all such steps as are reasonable to secure compliance by the trustees or managers of that scheme with any direction given to them under section 72B.

• (4) Section 10 applies to any person who—

• (a) is a person to whom a direction under section 72B is given otherwise than in the capacity of a trustee or manager; and

• (b) without reasonable excuse, fails to comply with that direction.

• (5) For the purposes of this section it shall not be a reasonable excuse in relation to any failure to provide information in pursuance of a direction under section 72B that the provision of that information would (but for the duty imposed by subsection (1) of this section) involve a breach by any person of a duty owed to another not to disclose that information.

Winding up

Preferential liabilities on winding up.

73

• (1) This section applies where an occupational pension scheme to which this section applies is being wound up to determine the order in which the assets of the scheme are to be applied towards satisfying the liabilities of the scheme in respect of pensions and other benefits.

• (2) This section applies to an occupational pension scheme other than a scheme which is—

• (a) a money purchase scheme, or

• (b) a prescribed scheme or a scheme of a prescribed description.

• (3) The assets of the scheme must be applied first towards satisfying the amounts of the liabilities mentioned in subsection (4) and, if the assets are insufficient to satisfy those amounts in full, then—

• (a) the assets must be applied first towards satisfying the amounts of the liabilities mentioned in earlier paragraphs of subsection (4) before the amounts of the liabilities mentioned in later paragraphs, and

• (b) where the amounts of the liabilities mentioned in one of those paragraphs cannot be satisfied in full, those amounts must be satisfied in the same proportions.

• (4) The liabilities referred to in subsection (3) are—

• (a) where—

• (i) the trustees or managers of the scheme are entitled to benefits under a relevant pre-1997 contract of insurance entered into in relation to the scheme, and

• (ii) either that contract may not be surrendered or the amount payable on surrender does not exceed the liability secured by the contract,

the liability so secured;

• (b) any liability for pensions or other benefits to the extent that the amount of the liability does not exceed the corresponding PPF liability, other than a liability within paragraph (a);

• (c) any liability for pensions or other benefits which, in the opinion of the trustees or managers, are derived from the payment by any member of voluntary contributions, other than a liability within paragraph (a) or (b);

• (d) any other liability in respect of pensions or other benefits.

• (5) For the purposes of subsection (4)—

• “corresponding PPF liability” in relation to any liability for pensions or other benefits means—where the liability is to a member of the scheme, the cost of securing benefits for or in respect of the member corresponding to the compensation which would be payable to or in respect of the member in accordance with the pension compensation provisions if the Board of the Pension Protection Fund assumed responsibility for the scheme in accordance with Chapter 3 of Part 2 of the Pensions Act 2004 (pension protection), andwhere the liability is to another person in respect of a member of the scheme, the cost of securing benefits for that person corresponding to the compensation which would be payable to that person in respect of the member in accordance with the pension compensation provisions if the Board assumed responsibility for the scheme in accordance with that Chapter;

• “relevant pre-1997 contract of insurance” means a contract of insurance which was entered into before 6th April 1997 with a view to securing the whole or part of the scheme’s liability for—any pension or other benefit payable to or in respect of one particular person whose entitlement to payment of a pension or other benefit has arisen, andany benefit which will be payable in respect of that person on his death.

• (6) For the purposes of this section, when determining the corresponding PPF liability in relation to any liability of a scheme to, or in respect of, a member for pensions or other benefits, the pension compensation provisions apply with such modifications as may be prescribed.

• (7) Regulations may modify subsection (4).

• (8) For the purposes of that subsection—

• (a) regulations may prescribe how it is to be determined whether a liability for pensions or other benefits which, in the opinion of the trustees or managers of the scheme, are derived from the payment by any member of voluntary contributions falls within paragraph (a) or (b) of that subsection;

• (b) no pension or other benefit which is attributable (directly or indirectly) to a pension credit is to be regarded for the purposes of paragraph (c) of that subsection as derived from the payment of voluntary contributions.

• (9) Where, on the commencement of the winding up period, a member becomes a person to whom Chapter 2 of Part 4ZA of the Pension Schemes Act 1993 (early leavers: cash transfer sums and contribution refunds) applies, that Chapter applies in relation to him with such modifications as may be prescribed.

• (10) For the purposes of this section—

• “assets” of a scheme to which this section applies do not include any assets representing the value of any rights in respect of money purchase benefits under the scheme rules;

• “liabilities” of such a scheme do not include any liabilities in respect of money purchase benefits under the scheme rules;

• “the pension compensation provisions” has the same meaning as in Part 2 of the Pensions Act 2004 (see section 162 of that Act);

• “scheme rules” has the same meaning as in the Pensions Act 2004 (see section 318 of that Act);

• “winding up period”, in relation to an occupational pension scheme to which this section applies, means the period which—begins with the day on which the time immediately after the beginning of the winding up of the scheme falls, andends when the winding up of the scheme is completed.

Operation of scheme during winding up period

73A

• (1) This section applies where an occupational pension scheme to which section 73 applies is being wound up.

• (2) During the winding up period, the trustees or managers of the scheme—

• (a) must secure that any pensions or other benefits (other than money purchase benefits) paid to or in respect of a member are reduced, so far as necessary, to reflect the liabilities of the scheme to or in respect of the member which will be satisfied in accordance with section 73, and

• (b) may, for the purposes of paragraph (a), take such steps as they consider appropriate (including steps adjusting future payments) to recover any overpayment or pay any shortfall.

• (3) During the winding up period—

• (a) no benefits may accrue under the scheme rules to, or in respect of, members of the scheme, and

• (b) no new members of any class may be admitted to the scheme.

• (4) Subsection (3) does not prevent any increase, in a benefit, which would otherwise accrue in accordance with the scheme or any enactment.

• (5) Subsection (3) does not prevent the accrual of money purchase benefits to the extent that they are derived from income or capital gains arising from the investment of payments which are made by, or in respect of, a member of the scheme.

• (6) Where a person is entitled to a pension credit derived from another person’s shareable rights under the scheme, subsection (3) does not prevent the trustees or managers of the scheme discharging their liability in respect of the credit under Chapter 1 of Part 4 of the Welfare Reform and Pensions Act 1999 (sharing of rights under pension arrangements) by conferring appropriate rights under the scheme on that person.

• (6A) During the winding up period no right or entitlement of any member, or of any other person in respect of a member, to a benefit that is not a money purchase benefit is to be converted into, or replaced with, a right or entitlement to a money purchase benefit under the scheme rules.

• (7) Regulations may require the trustees or managers of the scheme, in prescribed circumstances—

• (a) to adjust the entitlement of a person to a pension or other benefit under the scheme rules where the entitlement arises as a result of a discretionary award which takes effect during the winding up period;

• (b) to adjust the entitlement of a person (“the survivor”) to a pension or other benefit under the scheme rules where—

• (i) a member of the scheme, or a person who was (or might have become) entitled to a pension or other benefit in respect of a member, dies during the winding up period, and

• (ii) the survivor’s entitlement is to a pension or other benefit in respect of the member (whether arising on the date of that death or subsequently).

• (8) Regulations under subsection (7) may, in particular—

• (a) prescribe how the required adjustments to entitlement are to be determined and the manner in which they are to be made;

• (b) in a case where the commencement of the winding up of the scheme is backdated (whether in accordance with section 154 of the Pensions Act 2004 (requirement to wind up schemes with sufficient assets to meet protected liabilities) or otherwise), require any adjustment to a person’s entitlement to be made with effect from the time the award takes effect;

• (c) without prejudice to sections 10(3) to (9), 73B(2) and 116, make provision about the consequences of breaching the requirements of the regulations.

• (9) If the scheme confers power on any person other than the trustees or managers of the scheme to apply the assets of the scheme in respect of pensions or other benefits (including increases in pensions or benefits), it cannot be exercised by that person but may, subject to the provisions made by or by virtue of this section and sections 73 and 73B, be exercised instead by the trustees or managers.

• (10) For the purposes of this section—

• “appropriate rights” has the same meaning as in paragraph 5 of Schedule 5 to the Welfare Reform and Pensions Act 1999 (pension credits: mode of discharge);

• “discretionary award” means an award of a prescribed description;

• “shareable rights” has the same meaning as in Chapter 1 of Part 4 of the Welfare Reform and Pensions Act 1999 (sharing of rights under pension arrangements);

• and subsection (10) of section 73 applies as it applies for the purposes of that section.

Sections 73 and 73A: supplementary

73B

• (1) Any action taken in contravention of section 73A(3) or (6A) is void.

• (2) If any provision made by or by virtue of the winding up provisions is not complied with in relation to a scheme to which section 73 applies, section 10 applies to any trustee or manager of the scheme who has failed to take all reasonable steps to secure compliance.

• (3) For the purposes of subsection (2), when determining whether section 73A(3) or (6A) has been complied with subsection (1) of this section is to be disregarded.

• (4) Regulations may—

• (a) prescribe how, for the purposes of the winding up provisions—

• (i) the assets and liabilities of a scheme to which section 73 applies, and

• (ii) their value or amount,

are to be determined, calculated and verified;

• (b) modify any of the winding up provisions as it applies—

• (i) to prescribed schemes or prescribed descriptions of schemes;

• (ii) in relation to a scheme where only part of the scheme is being wound up;

• (iii) in relation to a case where any liability of the scheme in respect of a member has been discharged by virtue of regulations under section 135(4) of the Pensions Act 2004 (power to make regulations permitting discharge of scheme’s liabilities during an assessment period).

• (5) Without prejudice to the generality of subsection (4), regulations under paragraph (b)(i) of that subsection may, in particular, modify any of the winding up provisions as it applies in relation to a scheme in relation to which there is more than one employer.

• (6) The winding up provisions do not apply—

• (a) in relation to any liability for an amount by way of pensions or other benefits which a person became entitled to payment of, under the scheme rules, before commencement of the winding up period,

• (b) in prescribed circumstances, in relation to any liability in respect of rights of a prescribed description to which a member of the scheme became entitled under the scheme rules by reason of his pensionable service under the scheme terminating before the commencement of the winding up period,

• (c) in relation to any liability in respect of rights of prescribed descriptions to which a member of the scheme had become entitled under the scheme rules before the commencement of the winding up period, or

• (d) in relation to any liability the discharge of which is validated under section 136 of the Pensions Act 2004 (power to validate actions taken during an assessment period to discharge liabilities of a scheme).

• (7) But nothing in subsection (6) prevents the winding up provisions applying in relation to a liability under Chapter 1 of Part 4ZA of the Pension Schemes Act 1993 (transfer values) which—

• (a) arose before the commencement of the winding up of the scheme, and

• (b) was not discharged before the commencement of the winding up period.

• (8) Regulations may provide that, in prescribed circumstances, where—

• (a) an occupational pension scheme to which section 73 applies is being wound up,

• (b) a member of the scheme died before the winding up began, and

• (c) during the winding up period a person becomes entitled under the scheme rules to a benefit of a prescribed description in respect of the member,

his entitlement to payment of all or part of the benefit is, for the purposes of subsection (6), to be treated as having arisen immediately before the commencement of the winding up period.

• (9) If, immediately before the winding up period in relation to an occupational pension scheme to which section 73 applies, a person is entitled to an amount but has postponed payment of it, he is not, for the purposes of subsection (6), to be regarded as having become entitled to payment of the amount before that period.

• (10) For the purposes of this section—

• (a) “winding up provisions” means this section and sections 73, 73A and 74, and

• (b) subsection (10) of section 73 applies as it applies for the purposes of that section.

Discharge of liabilities by insurance, etc.

74

• (1) This section applies where an occupational pension scheme to which section 73 applies is being wound up.

• (2) A liability to or in respect of a member of the scheme in respect of pensions or other benefits ... is to be treated as discharged (to the extent that it would not be so treated apart from this section) if the trustees or managers of the scheme have, in accordance with prescribed arrangements, provided for the discharge of the liability in one or more of the ways mentioned in subsection (3).

• (3) The ways referred to in subsection (2) are—

• (a) by acquiring transfer credits allowed under the rules of another occupational pension scheme which satisfies prescribed requirements and the trustees or managers of which are able and willing to accept payment in respect of the member,

• (b) by acquiring rights allowed under the rules of a personal pension scheme which satisfies prescribed requirements and the trustees or managers of which are able and willing to accept payment in respect of the member’s accrued rights or pension credit rights,

• (c) by purchasing one or more annuities which satisfy prescribed requirements from one or more insurers, being companies willing to accept payment in respect of the member from the trustees or managers,

• (d) by subscribing to other pension arrangements which satisfy prescribed requirements,

• (e) by the payment of a cash sum in circumstances where prescribed requirements are met.

• (4) If the assets of the scheme are insufficient to satisfy in full the liabilities, as calculated in accordance with the scheme rules, in respect of pensions and other benefits ... , the reference in subsection (2) to providing for the discharge of any liability in one or more of the ways mentioned in subsection (3) is to applying any amount available, in accordance with section 73, in one or more of those ways.

• (5) Regulations may provide for this section—

• (a) to have effect in relation to so much of any liability as may be determined in accordance with the regulations, ...

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) For the purposes of this section—

• (a) references to assets of the scheme do not include any assets representing the value of any rights in respect of money purchase benefits under the scheme rules, and

• (b) references to liabilities of the scheme do not include any liabilities in respect of money purchase benefits under the scheme rules;

and “scheme rules” has the same meaning as in the Pensions Act 2004 (see section 318 of that Act).

Deficiencies in the assets.

75

• (1) This section applies in relation to an occupational pension scheme other than a scheme which is—

• (a) a money purchase scheme, or

• (b) a prescribed scheme or a scheme of a prescribed description.

• (1A) Where a pension scheme is divided into sections, each section that is a collective money purchase scheme for the purposes of Part 1 of the Pension Schemes Act 2021 (see section 1(2)(b) of that Act) is to be treated for the purposes of this section as a separate occupational pension scheme which is a money purchase scheme.

• (2) If—

• (a) at any time which falls—

• (i) when a scheme is being wound up, but

• (ii) before any relevant event in relation to the employer which occurs while the scheme is being wound up,

the value of the assets of the scheme is less than the amount at that time of the liabilities of the scheme, and

• (b) the trustees or managers of the scheme designate that time for the purposes of this subsection (before the occurrence of an event within paragraph (a)(ii)),

an amount equal to the difference shall be treated as a debt due from the employer to the trustees or managers of the scheme.

This is subject to subsection (3).

• (3) Subsection (2) applies only if—

• (a) either—

• (i) no relevant event within subsection (6A)(a) or (b) occurred in relation to the employer during the period beginning with the appointed day and ending with the commencement of the winding up of the scheme, or

• (ii) during the period—

• (a) beginning with the occurrence of the last such relevant event which occurred during the period mentioned in sub-paragraph (i), and

• (b) ending with the commencement of the winding up of the scheme,

a cessation notice was issued in relation to the scheme and became binding, and

• (b) no relevant event within subsection (6A)(c) has occurred in relation to the employer during the period mentioned in paragraph (a)(i).

• (4) Where—

• (a) immediately before a relevant event (“the current event”) occurs in relation to the employer the value of the assets of the scheme is less than the amount at that time of the liabilities of the scheme,

• (b) the current event—

• (i) occurred on or after the appointed day, and

• (ii) did not occur in prescribed circumstances,

• (c) if the scheme was being wound up immediately before that event, subsection (2) has not applied in relation to the scheme to treat an amount as a debt due from the employer to the trustees or managers of the scheme,

• (d) if the current event is within subsection (6A)(a) or (b), either—

• (i) no relevant event within subsection (6A)(a) or (b) occurred in relation to the employer during the period beginning with the appointed day and ending immediately before the current event, or

• (ii) a cessation event has occurred in relation to the scheme in respect of a cessation notice issued during the period—

• (a) beginning with the occurrence of the last such relevant event which occurred during the period mentioned in sub-paragraph (i), and

• (b) ending immediately before the current event, and

• (e) no relevant event within subsection (6A)(c) has occurred in relation to the employer during the period mentioned in paragraph (d)(i),

an amount equal to the difference shall be treated as a debt due from the employer to the trustees or managers of the scheme.

• (4A) Where the current event is within subsection (6A)(a) or (b), the debt under subsection (4) is to be taken, for the purposes of the law relating to insolvency as it applies to the employer, to arise immediately before the occurrence of the current event.

• (4B) Subsection (4C) applies if, in a case within subsection (4)—

• (a) the current event is within subsection (6A)(a) or (b), and

• (b) the scheme was not being wound up immediately before that event.

• (4C) Where this subsection applies, the debt due from the employer under subsection (4) is contingent upon—

• (a) a scheme failure notice being issued in relation to the scheme after the current event and the following conditions being satisfied—

• (i) the scheme failure notice is binding,

• (ii) no relevant event within subsection (6A)(c) has occurred in relation to the employer before the scheme failure notice became binding, and

• (iii) a cessation event has not occurred in relation to the scheme in respect of a cessation notice issued during the period—

• (a) beginning with the occurrence of the current event, and

• (b) ending immediately before the issuing of the scheme failure notice,

and the occurrence of such a cessation event in respect of a cessation notice issued during that period is not a possibility, or

• (b) the commencement of the winding up of the scheme before—

• (i) any scheme failure notice or cessation notice issued in relation to the scheme becomes binding, or

• (ii) any relevant event within subsection (6A)(c) occurs in relation to the employer.

• (5) For the purposes of subsections (2) and (4), the liabilities and assets to be taken into account, and their amount or value, must be determined, calculated and verified by a prescribed person and in the prescribed manner.

• (6) In calculating the value of any liabilities for those purposes, a provision of the scheme rules which limits the amount of its liabilities by reference to the amount of its assets is to be disregarded.

In this subsection “scheme rules” has the same meaning as in the Pensions Act 2004 (“the 2004 Act”) (see section 318 of that Act).

• (6A) For the purposes of this section, a relevant event occurs in relation to the employer in relation to an occupational pension scheme if and when—

• (a) an insolvency event occurs in relation to the employer,

• (b) the trustees or managers of the scheme make an application under subsection (1) of section 129 of the 2004 Act or receive a notice from the Board of the Pension Protection Fund under subsection (5)(a) of that section, or

• (c) a resolution is passed for a voluntary winding up of the employer in a case where a declaration of solvency has been made under section 89 of the Insolvency Act 1986 (members' voluntary winding up).

• (6B) For the purposes of this section—

• (a) a “cessation notice”, in the case of a relevant event within subsection (6A)(a), means—

• (i) a withdrawal notice issued under section 122(2)(b) of the 2004 Act (scheme rescue has occurred),

• (ii) a withdrawal notice issued under section 148 of that Act (no insolvency event has occurred or is likely to occur),

• (iii) a notice issued under section 122(4) of that Act (inability to confirm status of scheme) in a case where the notice has become binding and section 148 of that Act does not apply,